MOHORI BIBEE Vs DHARMODAS GHOSE  1903

CASE NAME-MOHORI BIBEE Vs DHARMODAS GHOSE  1903

CASE CITATION-IL (1903) 30 Cal 539 (Pc)

COURT NAME-Privy council

NAME OF THE JUDGES –Lord McNaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, Sir Andrew Wilson, JJ.

DATE OF JUDGEMENT- 4^TH MARCH 1903

INTRODUCTION-

 The leading case of Mohori Bibee vs Dharmodas brings to the fore the scope of minors’ contract which holds that if a minor makes a contract, it would be void ab initio and this is the primary legal issue which was raised in this case. Under Indian contract Act 1872, any agreement or contract which is entered into with minor i.e. with a person who has not reached the legal age or the age of majority i.e. 18 years, according to Indian Majority Act 1875, Section 3 will qualify as a void contract instead it will be void ab-initio as stated earlier. Even in present scenario, this case is a landmark case when the scope of minors’ agreement is concerned.

PARTIES INVOLVED:

There are two parties involved in this case. Both the parties and the preview of their issues have been discussed below;

1. DHARMODAS GHOSE- He was respondent to the case, who was at the time of the agreement, lived in Calcutta, Bengal and belonged to very affluent Bengali family.

He was a minor (i.e. has not completed the 18 years of age) and he was the sole owner of his immovable property. The mother of Dharmodas Ghose was authorized as his legal custodian by Calcutta High Court.

2. BRAMHO DUTT- Bhramo Dutta, who operated as a money lender during that period, obtained a loan of Rs. 20,000, and the oversight of his business was handled by Kedar Nath, who served as Brahmo Dutta’s attorney.

FACTS OF THE CASE-[1]

1. On 20th of July, 1895 Dharmadas Ghose executed a mortgage of his immovable property in favour of Bramho Dutt, who was a money lender having business at Calcuttato secure the payment of Rs. 20,000/- at interest rate of 12%.
2. The amount advanced is in dispute which is less than 20,000/-. Kedar Nath was an Attorney to the Bramho Dutt and has a control over his (Bramho Dutt’s) business in Calcutta.
3. At the time of the actual Mortgage, Dharmadas Ghose was still a minor and has not attained the age of 21 years. Dharmadas Ghose’s mother who was appointed as a guardian by High Court; has sent a notice on 15th July to Kedar Nath stating minority of Dharmadas Ghose.
4. Dedraj, who was a local manager of Bramho Dutt and in-charge of money, has given money or sum to Dharmadas Ghose although he had full knowledge that he is a minor and is incompetent to mortgage his property.
5. After 10th September, 1895, Dharmadas Ghose filed a suit through his (guardian) mother as next friend against Bramho Dutt stating that he was under age when he executed the mortgage and praying for declaration that it was void and inoperative. Bramho Dutt contended that, neither he nor his attorney receive any notice regarding the minority of the Dharmadas Ghose and further contended that court should not grant any relief to Dharmadas Ghose without making him repay the money advanced.
6. But this case failed and court has given judgment in favour of Dharmadas Ghose and the case was subject to appeal. During the pendency of the appeal, Brahmo Dutt died and this appeal was prosecuted by his executors. This appeal was dismissed by the court of first instance i.e. High Court of Judicature at Fort Williams.
7. Therefore, being aggrieved by this second appeal lies before Privy Council.

ISSUES RAISED-

1. Whether mortgage deed was void under sections 2, 10 and 11 of the Indian Contract Act, 1872?
2. Whether mortgage was voidable or not?
3. Whether Dharmadas Ghose was liable to return the amount advanced?

ARGUMENT OF THE PARTIES:

APPALLANTS ARGUMENT

The respondent claims, as per the case of Mohori Bibee vs Dharmodas Ghose, that he was a minor when he executed the mortgage. However, the appellant argues that the respondent was of legal age at that time. The appellant and their representative were not aware that the respondent was a minor. They claim that the respondent provided false information regarding his age and, as a result, should not be entitled to any relief.

The appellant further asserts that Section 115 of the Indian Evidence Act, 1872, is applicable in this case.

This section provides that if a person, by their actions, declarations, or omissions, causes another person to believe something to be true, and that person acts upon that belief, neither the person nor their representatives can later deny the truth of that matter in any legal proceeding.

In the case of Mohori Bibee vs Dharmodas Ghose, the appellant argues that the respondent must repay the amount that was advanced to him in accordance with Section 64 and Section 38 of the Indian Contract Act, 1872, as well as Section 41 of the Specific Relief Act, 1877.

Section 38 of the Indian Contract Act, 1872, provides that if a promisor offers to perform their part of the contract to the promise and the offer is not accepted, the promisor is not held responsible for non-performance and does not lose their rights under the contract.

Section 41 of the Indian Contract Act, 1872, mentions that when a promisee accepts performance of a promise from a third party, they cannot later enforce that promise against the original promisor.

Section 64 of the Indian Contract Act, 1872, states that when a person has the option to rescind a contract and chooses to do so, the other party to the contract is not required to fulfil any promises contained in the contract where they are the promisor.

RESPONDENTS ARGUMENT:

In response to the plaintiff’s contention, it was stated that Brahmo Dutt and his agent Kedar were already aware of the plaintiff’s age, as the plaintiff’s mother had informed them.

 Since Dharmodas did not meet the legal age requirement, the High Court appointed the plaintiff’s mother as his legal guardian. The plaintiff’s mother had already sent a letter regarding this matter, which was acknowledged by Kedar Nath. Despite this, Kedar Nath proceeded with the execution of the deed.

As the plaintiff was a minor at the time of entering into the contract, the contract is considered void.

RELEVANT LAWS AND STATUTES REFFERED:

Law of Estoppel[2]

The law of estoppel states that if a person incurs liability based on another person’s representation, they cannot later change their position. In Mohori Bibee versus Dharmodas Ghose, the law of estoppel was not applied because the appellant’s attorney knew about the respondent’s minority status. However, it has been held in various other cases that the law of estoppel does not apply against minors.

Even if a minor intentionally misrepresents their age, they can still plead minority as a defence to avoid liability. This approach is taken to protect minors from incurring liabilities, as the law deems them incompetent to contract. Applying estoppel against a minor would defeat the purpose of Section 11 of the Contract Act, which renders minor’s incompetent to contract.

Section 64 and 65 of the Indian Contract Act, 1872

Sections 64 and 65 of the Indian Contract Act deal with the restoration of benefits received under voidable and void contracts, respectively.

The court in Mohori Bibee versus Dharmodas Ghose noted that these sections apply to contracts between competent parties that have been declared void or voidable. However, since the parties in this case were not competent due to the respondent’s minority, these provisions for the restoration of benefits under the Contract Act would not apply.

Refund under the Specific Relief Act, 1877 (now Section 33 of the Specific Relief Act, 1963)

Section 41 of the Specific Relief Act, 1877, which corresponds to the current Section 33 of the Specific Relief Act, 1963, states that when a court cancels an instrument, it may require the party to whom the relief is granted to compensate the other party as justice demands.

Essentially, this provision means that if a party seeks the cancellation of an instrument in court and also requests the restoration of benefits received under that instrument, they cannot claim a refund of those benefits under the Specific Relief Act. In this case, the appellant sought the cancellation of the instrument and the restoration of benefits, so they cannot claim a refund under this Act.

Equitable Doctrine of Restitution for Minors

Courts have developed an equitable doctrine of restitution in cases involving minor agreements. According to this doctrine, if a minor has received benefits in the form of goods or other non-monetary assets under a transaction, those goods or assets, as long as they are traceable, should be returned to the bona fide party to the agreement.

However, there is a difference of opinion among courts when it comes to the restitution of money received by minors. The established legal principle in Mohori Bibee v. Dharmodas Ghose is that agreements with minors are void ab initio, meaning void from the outset.

JUDGEMENT:

[3]Brahmo Dutt filed a suit in the trial court, and according to the trial court’s ruling, the agreement was found to be null and void. The court decided that the deed between the plaintiff and the defendant was invalid because the executor was underage when the mortgagee was issued. Brahmo Dutt was not satisfied with this decision and appealed to the Calcutta High Court. The Calcutta High Court rejected his appeal, agreeing with the trial court’s interpretation of the facts. The case was further challenged before the Privy Council, which stated that the agreement made with a minor is void ab initio, meaning it is void from the very beginning.

In the first instance, in the case of Mohori Bibee v Dharmodas Ghose, the court decided that Brahmo Dutt’s attorney knew about Dharmodas’s minority status, so the principle of estoppel does not apply in this case.

In the second instance, the court clarified that the provisions of Sections 64 and 65 of the Indian Contract Act are not applicable because there was never a valid agreement between the parties. A valid contract must be entered into by competent parties for these sections to apply. As a result, the court’s decision in Mohori Bibee v Dharmodas Ghose established a precedent that contracts made by minors are void ab initio, meaning they are void from the beginning. Since Dharmodas Ghose was a minor, he is not legally bound to perform any promise under the contract and is not required to return the advance amount he received earlier.

RATIO DECIDENDI:

After this case, it was decided that a contract involving a minor will be considered void from the beginning, rather than just void or voidable. The court also said that an agent acting on behalf of a principal is mainly responsible if they knew about the matter. The Majority Act, which defines a person’s majority and minority status, has now been implemented. It states that an Indian citizen is considered a major once they turn 18, and there will be no further changes to this. If a minor has a guardian appointed by the court, their age of majority will be 21 instead of 18. As a result, the concept of majority and minority has become clearer.

CONCLUSION:

In the case of Mohori Bibee V/S Dharmodas Ghose, it can be concluded that any agreement or document in which a minor is a party or is included in any way is considered null and void, as such agreements are not recognized by law. Any agreement involving an infant cannot be enforced against them. In cases where a minor enters into dealings without the consent or knowledge of their parents or custodians, those parents or guardians will not be held responsible for the amount taken by the minor, nor will they be bound by any moral obligations to return it. However, if the minor acts with the consent or knowledge of their parents or guardians, then the parents or guardians will be liable to repay the amount involved. If a minor gains any benefit from a void agreement, they cannot be compelled to return or compensate for that benefit.

Reference(S):

[1] MOHRI BIBEE V. DHARMADAS GHOSE [(1930) 30 CAL. 539] judicateme.com

[2] Mohori Bibee vs Dharmodas Ghose https://lawbhoomi.com/mohori-bibee-vs-dharmodas-ghose,

[3] VAISHNAVI KUMARI, CASE ANALYSIS OF MOHORI BIBEE VS DHARMODAS GHOSE, INTERNATIONAL JOURNAL OF LAW MANAGEMENT & HUMANITIES, VOL 7, ISSUE 4, 2581-5369